The author is a Forbes contributor. The opinions expressed are those of the writer.

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Continued from page 2

The purpose of a gold standard is to create stable money – money that is stable in value. No economic crisis has ever been caused by stable money. The liquidity-shortage crises that emerged during the 19th century were eventually solved, within the context of the gold standard system.

What the Keynesians are really complaining about is the fact that a gold standard system prevents them from engaging in their favorite pastime, jiggering the currency. In other words, "20th century central banking." And what has been the result of that? The U.S. census just declared that the median annual earnings of males employed full time was $47,715 in 2010. This is practically the same as the inflation-adjusted $44,455 of 1969 – just before the gold standard system ended in 1971. We’ve gone nowhere in forty years.

Those figures are subject to the government’s official inflation statistics, which might make things look better than they really are. Let’s look at this a different way. In 1969, a dollar was worth 1/35th of an ounce of gold. So, the median full-time male income, of $8,668 nominal, was 248 ounces of gold. In 2010, the dollar was worth an average of 1/1224th of an ounce of gold, and the full-time male worker was making only 39 ounces of gold. This figure is somewhat exaggerated by the rapid decline in the dollar in recent years, but describes, I would say, the economic reality of the situation.

Today, the Keynesians continue to believe that they can fix the economy’s problems with an "easy money" policy. The result is that the value of the dollar declines. If the value of the dollar declines, then the value of wages paid in dollars declines. People become poorer. This looks like it is going to go on for quite a while longer.

Eventually, people may decide that they are a little tired of having their wages devalued by the funny-money magicians. They may demand that their currency is once again linked to gold, the eternal money. This is entirely compatible with "19th century" central banking, It’s the "20th century central banking" that we want to get rid of.